) --

Morgan Stanley

(MS) - Get Report

announced changes to top management to take effect at the start of the year, when James Gorman takes the over the CEO post from John Mack.

Colm Kelleher, CFO and head of global markets, and Paul Taubman head of investment banking, will take over as co-presidents of institutional securities, while Mitch Petrick will step down as head of the bank's sales and trading unit.

The sales and trading unit looked flat-footed in the second quarter, when competitors like Goldman and

JPMorgan Chase

(JPM) - Get Report

raked in big trading profits by putting capital at risk before it became clear the worst of the crisis had passed. Morgan Stanley later had to hire some 400 people to rebuild its trading business, which had been weakened by staff cuts.

Ruth Porat, head of the investment banking unit that advises financial institutions, will step into the CFO spot and Thomas Nides, a longtime and trusted deputy to Mack, becomes chief administrative officer.

Overseeing the Morgan Stanley Smith Barney wealth management business that the company bought from


TST Recommends

(C) - Get Report

is Jim Rosenthal. Rosenthal has been head of technology and operations. He will also take on the role of head of corporate strategy.

Though it faced extinction along with many other once-proud financial companies last year, Morgan Stanley has rebounded in 2010. It has been at or near the top in many rankings of merger advisors, and its trading business appears to be back on solid footing. Perhaps in part because it did not buy any giant troubled companies as

Bank of America

(BAC) - Get Report


Wells Fargo

(WFC) - Get Report

did, and because it has not had the spectacular success of onetime arch-rival Goldman Sachs, it has avoided some of the political turmoil and intense public scrutiny directed at other giant financial companies.

Morgan Stanley shares were off 23 cents to $30.15 in recent action. Based on Monday's close, the stock was up more than 86% in the past year, far outpacing appreciation of 21% for the

S&P 500

index. The shares, however, have pulled back nearly 16% since reaching a 52-week high of $35.78 in late October.


Written by Dan Freed in New York